Monterey water agency hopes to sell hydro power to BART

By JIM JOHNSON, Monterey Herald

Posted:
02/11/2014 11:37:41 AM PST

Updated:
02/11/2014 11:40:08 AM PST

Seven months after a previous deal fell through, Monterey County Water Resources Agency officials now want to sell hydroelectric power from Nacimiento Dam to a joint powers agency that represents the Bay Area Rapid Transit system and others.

On Tuesday, the Board of Supervisors are set to consider a proposed 20-year power purchase agreement with the Roseville-based Northern California Power Agency, a not-for-profit organization that represents more than a dozen agencies in Northern and Central California including BART, the Port of Oakland, Silicon Valley Power, and Alameda Municipal Power.

County water agency General Manager David Chardavoyne said he's pleased to have reached an agreement with the agency after a deal with a Southern California city disintegrated last year following The Herald's reporting.

"Given what happened last time, contracting with (a joint powers agency) is easier," Chardavoyne said.

Chardavoyne said the deal would start April 1 and earn the water agency about $1 million per year when the Nacimiento power plant is fully operational and producing about 15,000 megawatt hours per year. When factoring in the value of renewable energy credits, Chardavoyne said the water agency will earn about $75 per megawatt hour, more than twice what it had been getting from PG&E since 1987, before it began exploring other potential purchasers.

PG&E had been paying about $35 per megawatt hour, said Chardavoyne.

The proposal also calls for hydro power rate to increase 1.5 percent each year, Chardavoyne said.

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A report to the supervisors on the power purchase deal redacted the exact price per megawatt hour. Chardavoyne said the redaction was to avoid preempting the NCPA board's consideration of the agreement, but did not provide an unredacted version of the price list.

The NCPA board approved the agreement on Jan. 23, and the water agency board approved the deal on Jan. 27.

The increased revenue is expected to play a key role in helping restore the water agency to fiscal health after struggling for the past few years to balance its budgets.

When water agency officials began looking for other hydro power purchasers last year, BART submitted one of the two top-ranked proposals, but agency officials decided to seek a deal with the city of Corona, which submitted the other top proposal. Chardavoyne said Corona was chosen because city officials indicated they were willing to move quicker on a potential agreement.

However, after The Herald reported the terms of the deal, which included about the same price per megawatt hour, and supervisors approved the deal in a special session on June 28, Chardavoyne said Corona officials suddenly stopped communicating with water agency officials even after they repeatedly assured him the terms were acceptable.

Chardavoyne later said he believed The Herald's reporting prompted a competing power provider to step in and undercut the water agency's price.

Eventually, the water agency was forced to terminate the agreement in early August. Corona city officials never responded to The Herald's requests for comment.

In the meantime, water agency officials hired an energy scheduling coordinator, Viasyn, Inc., to help sell its hydro power on the California Independent System Operator Corporation power grid for about $20,000 per year, and then reached a short-term deal with Manhattan Beach-based 3 Phases Renewables until a long-term agreement could be reached.

Chardavoyne and other water agency officials declined to reveal the price 3 Phases agreed to pay, arguing that doing so might ruin the deal and the information could be kept confidential under a "trade secrets" exemption from public disclosure rules.

A report suggested the water agency expected to collect about $300,000 for about 4,500 megawatt hours, a price of about 67 cents per unit.

Chardavoyne said the Nacimiento power plant is again able to operate at full capacity since the water agency spent about $1.4 million repairing it after it was damaged in mid-2012.